Tanzania may launch independent audit into mines

Workers at a mine in Tanzania. Extractive industries must comply with global transparency standards. Picture: File By MIKE MANDE (email the author)
Posted Saturday, June 2 2012 at 12:19
THE EAST AFRICAN

Tanzania may be forced to engage an independent auditor to investigate discrepancies in revenue receipts from mining firms.

A host of major extractive firms have failed to report templates of their accounts to the transparency reconciliation organisation,creating discrepancies of Tsh5 billion ($3 million) in government revenue.There are also discrepancies in import duty declared between the Tanzania Revenue Authority and the Geita Gold Mine reports. Global standards for transparency in oil, gas and mining are becoming crucial for good governance in the exploitation of these resources, as these standards can generate large revenues to foster growth and reduce poverty.
The revenue discrepancies represents one per cent of total government reported receipts for the year ended June 30, 2010 and all efforts by the Transparency Initiative to resolve the differences have failed.
Mark Bomani, chairman of the Tanzania Extractive Industries Transparency Initiative Multi-Stakeholders Working Group (MSG) says that the difference is in favour of the companies, meaning that they report having paid more than what the government reports as having received.
Mr Bomani said that the extractive firms have reported paying Tsh44 billion ($27 million) to the government while the government reports having received Tsh39.1 billion ($24 million).
Out of the Tsh44.1 billion, Tsh35 billion ($22 million) relates to Geita Gold Mine. The remaining Tsh9 billion ($5 million) is from other companies including Tanga Cement Company and Mbeya Cement Company and others relating to various tax categories.
The MSG is continuing to dialogue with the two companies in question to ensure they comply with our requirements, he said.
Juvinal Betambira, partner at the BDO East Africa Tanzania office, said MSG will engage an independent consultant to investigate further.
He said that 21 extractive firms that comply with reporting transparency in reconciliation, paid the government a total of Tsh389 billion ($245 million).
The Tanzania Extractive Industries Transparency Initiative report published last week in Dar es Salaam says that the payments from mining firms to the government between 2009 and 2010 amounted to Tsh337 billion ($212 million), while oil and gas companies paid Tsh82 billion ($51 million).
The figures are broken down by the 21 companies that have reported payments.
This is up almost three times from the First Reconciliation report, which covered the period from July 1, 2008 to June 30, 2009 in which only 11 companies had reported their payments.
The Tanzania Extractive Industries Transparency Initiative will now invite citizens throughout the country to local meetings about the findings of the report to encourage public debate of the figures.
No reports
The increase in revenue is partly due to an increase in the number of companies included in the second report, and partly due to familiarity with the reporting procedure, said Mr Betambira.
The first report showed that government had received a total of $99.5 million while mining and gas companies showed payments of $135.5 million, resulting in a discrepancy of $36 million. After the Controller Auditor General investigated this discrepancy, it was reduced to $1.5 million.
Two companies, Tanzania Portland Cement Company and Mineral Extractions Technologies Ltd (METL), failed to submit reports to the Transparency Initiative for the reconciliation of revenues.

The former said it would not be able to co-operate with the request because it was preoccupied with dealing with squatters on its land.
Meanwhile, Mineral Extraction Technologies Ltd did not respond at all.